Foreign retirement plan

[ivamorba]

I am an immigrant and contributed all my work life to a retirement plan similar to a 401K in my country. By law, I cannot withdraw any of that money until I retire in a couple decades, but the account remains open and keeps earning dividends. Since the account has more than $10,000 in it I should report it using FBAR but, are those dividends taxable income? If so, where should I report it? 

[ReneeM7122]

Yes, since the account has more than $10,000 in it, you should report the dividend interest on the FinCEN Form 114 (FBAR).   The IRS requires taxpayers to report income from all sources both domestic and foreign, but that doesn't mean that the dividends are taxable on your U.S. income tax return.  You can qualify for the Foreign Tax Credit to offset any foreign taxes that you paid on your US tax return.   

You also must file Form 8938, Statement of Specified Foreign Financial Assets (FATCA).  

According to the IRS, If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you. 

FBAR - Report of Foreign Bank and Financial Accounts (FinCEN Form 114) 

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year.   The name of the form to file If you have any questions or require technical assistance using the BSA E-Filing system, you may call them at 866-270-0733;  or if calling from outside the United States, 313-234-6146. 

 Foreign Accounts Tax Compliance Act (FATCA)

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. The IRS receives information about foreign assets on form 8938 on your federal tax return. 

You must file the FBAR electronically through the Financial Crimes Enforcement Network’s BSA E-Filing System. You don’t file the FBAR with your federal tax return. 

The IRS has a Comparison of Form 8938 and FBAR Requirements on their website.

[kostopst]

According to the IRS site, you do not have to file FBAR form 114 for retirement accounts. See:

Report of Foreign Bank and Financial Accounts (FBAR) | Internal Revenue Service (irs.gov)

I also believe that the same holds for FATCA 8938, by the same reasoning. But I could not find anything on the IRS site yet. BTW, the TurboTax software does not differentiate between retirement and non-retirement accounts, so all foreign accounts are reportable.